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I am thinking of playing in a MTT (probably the $1000 mini main event) and asking some friends to help stake me. I am curious, does anyone have experience with staking and the subsequent taxation and/or paperwork (or lack there of)? I am the kind of person who asks these questions before actually needing an answer to them (i.e., before placing ITM in a tournament and figuring it out).

In addition to wanting to make sure that I pay out my stakers correctly (just after-tax pro-rata I assume) I want to make sure there is no confusion about who is owed what in case I place ITM. I have heard some horror stories in the past where someone pulled out of a handshake agreement (after realizing he was going to succeed) without the other party's consent only to create a big bru ha ha and ruin the friendship. So, any advice on up front work to do if I am going to email friends and ask them to stake me? Or should I just fly by the seat of my pants, fire off an email, play in the tourney, and figure it out if I place ITM?

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Yeah write up a simple agreement outlining things. It has a couple of benefits especially when it comes to tax liability, and of course protecting the investors and your interests. It does not have to be complicated. Just document the investments made, and the percentage of the win that investment qualifies for. Everyone is responsible for paying taxes on their own share.

I have heard a few horror or at least interesting stories. Like Scotty Nguyen selling 200% of himself the year he won WSOP main event. A friend of mine playing slots for a guy being stuck with all the WG's, while they made money his share did not cover the taxes which lead to years of IRS trouble and payments.

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